Corporate governance has become an important issue for Chinese and Indian firms as they increasingly interact with regulators and investors from developed markets. For instance, tapping into global capital markets to raise funds to finance their domestic and international growth requires firms from China and India to demonstrate strong corporate governance credentials, so that investors do not discount their stock (LaPorta, Lopez-de-Silanes, Shleifer, & Vishny, 2000). The swift action of Chinese and Indian authorities in response to recent corporate scandals – such as the one at Satyam Computers – reveals that even governments in emerging countries such as China and India see the need to promote good corporate governance to ensure the inflow of capital and the outflow of products. Furthermore, understanding corporate governance standards and issues in China and India is also important to executives of foreign multinationals doing business in these two countries.
Corporate governance is a recent concept that encompasses the costs caused by managerial misbehavior. Corporate governance is concerned with how organizations in general, and corporations in particular, produce value and how that value is distributed among the members of the corporation, its stakeholders. The interrelation of value production and value distribution links the ubiquitous technological aspect (the production of value) with the moral and ethical dimension (the distribution of value). Corporate governance is concerned with this link in general, but more specifically with the moral and ethical dimensions of distributing the generated value among the stakeholders. Value in firms is created by firm-specific investments, and the motivation and coordination of value enhancing activities and investment is protected by the power concentrated at the pyramidal top of the organization. In modern companies, it is the CEO and the top management deciding how to create value and how to distribute it among the relevant stakeholders. Due to asymmetric information and the imperfect nature of markets and contracts, adverse selection and moral hazard problems occur, where delegated (selected) managers could act in their own interest at the costs of other relevant stakeholders. Corporate governance is a two-tailed concept. The first aspect is about identifying the (most) relevant stakeholder(s), separating theory and practice into two different and conflicting streams: the stakeholder value approach and the shareholder value approach. The second aspect of the concept is about providing and analyzing different mechanisms, reducing the costs induced by moral hazard and adverse selection effects, and to balance out the motivation and coordination problems of the relevant stakeholders. Corporate governance is an interdisciplinary concept encompassing academic fields like finance, economics, accounting, law, taxation and psychology, among others. Like countries differ according to their institutions (i.e. legal and political systems, norms, and rules), firms differ according to their size, age, dominant shareholders or industries. Thus concepts in corporate governance differ along these dimensions as well. And while the underlying characteristics vary in time, continuously or as an exogenous shock, concepts in corporate governance are dynamic and static, offering a challenging field of interest for academics, policy makers and firm managers.
The following chapter identifies the meaning and main features of corporate governance, underlines the importance of an entity, which regulates and balances the interests of shareholders, stakeholders, and managers in order to realize a corporation's long-run goals. Currently, all models of corporate governance can be divided by their characteristics into three types: Anglo-American, German, and Japanese; each of these models has some unique elements that are required by a particular country. The process of forming and development of corporate governance in transitional economies are described as well. As the accuracy of corporate government influences the wiliness of investors to sink their capital, it is crucial to understand the methods of corporate governance efficiency evaluation by international rating agencies. Moreover, the example of Enron Corporation's failure shows the exceptional role of corporate governance in protecting and ensuring the rights of shareholders and stakeholders, solving the conflict between managers seeking higher bonuses and investors' goals on stable future return and potential growth.
During the last ten years, Estonia has made strong efforts in terms of the transition to a market economy. This is particularly true with respect to the soundness and transparency of monetary and fiscal policies, the privatisation of former state-owned enterprises, the development of the financial sector and the institutional setting. This paper argues that strengthening the formal institutional setting, and in particular the corporate governance institutions, is crucial to further enhance the process of economic transition of the country. It describes the current state the corporate governance structures as compared to other countries in Central and Eastern. ; In den letzten 10 Jahren hat Estland viele Anstrengungen in der Umwandlung in eine Marktwirtschaft unternommen. Dies trifft insbesondere auf die Stabilität und Transparenz der Währungs- und Finanzpolitik zu, der Privatisierung ehemaliger Staatsbetriebe, die Entwicklung im Finanzsektor und im institutionellen Umfeld. Der Aufsatz zeigt auf, dass die Stärkung des formellen institutionellen Umfeldes und im einzelnen auch die der Bereiche der Unternehmensorganisation essentiell wichtig für den weiteren Tranformationsprozess des Landes sind. Er stellt den heutigen Stand der Unternehmensstrukturen im Vergleich zu anderen Staaten dar.
This essay is a contribution to the forthcoming Oxford University Press Handbook of Corporate Law and Governance edited by Jeffery Gordon and Georg Ringe. In the 1960s and 1970s, corporate law and finance scholars recognized that neither discipline was doing a very good job of explaining how corporations were really structured and performed. For legal scholars, Yale Law School professor and then Stanford Law School dean Bayless Manning confessed that corporate law has "nothing left but our great empty corporation statutes – towering skyscrapers of rusted girders, internally welded together and containing nothing but wind." Michael Jensen and William Meckling made a similar comment with respect to finance. The theory of the firm was an "empty box" or a "black box" that provided no theory about "how the conflicting objectives of the individual participants are brought into equilibrium." The result of Jensen and Meckling's seminal reframing of corporate law in agency cost terms, and so into something far broader than disputes over statutory language, was that both Manning's empty skyscrapers and Jensen and Meckling's empty box began to be filled. The essay proceeds by tracking how corporate law became corporate governance – from legal rules standing alone to legal rules interacting with non-legal processes and institutions – through three somewhat idiosyncratically chosen but nonetheless related examples of how we have come to usefully complicate the inquiry into the structures that bear on corporate decision-making and performance. Part I frames the first level of complication in moving from law to governance by defining governance broadly as the company's operating system, a braided framework encompassing legal and non-legal elements. Part II then adds a second level of complication by treating corporate governance dynamically: corporate governance becomes a path dependent outcome of the tools available when a national governance system begins taking shape, and the process by which elements are added to the governance system going forward – driven by what Paul Milgrom and John Roberts call "supermodularity." That characteristic reads importantly on both the difficulty of corporate governance, as opposed to corporate law, reform and the non-intuitive pattern of the results of reform: significant reform leads to things getting worse before they get better. Part II then further complicates corporate governance by expanding it beyond the boundaries of the corporation, treating particular governance regimes as complementary to other social structures – for example, the labor market, the capital market and the political structure – that together define different varieties of capitalism. Next, Part III considers commonplace, but I will suggest misguided, efforts to take a different tack from Parts I and II: to simplify rather than complicate corporate governance analysis by recourse to now familiar single factor analytic models: stakeholder theory, team production, director primacy, and shareholder primacy. Part III suggests that these reductions are neither models nor particularly helpful; they neither bridge the contextual specificity of most corporate governance analysis nor address the necessary interaction in allocating responsibilities among shareholders, teams and directors. As well, these "models" are static rather than dynamic, a serious failing in an era in which the second derivative of change is positive in many business environments and Schumpeter seems to be getting the better of Burke. Part IV concludes by examining the importance of a corporate governance system's capacity to respond to changes in the business environment: the greater the rate of change, the more important is a governance system's capacity to adapt and the less important its ability to support long-term firm-specific investment.
The literature shows that good corporate governance generally pays for firms, for markets, and for countries. It is associated with a lower cost of capital, higher returns on equity, greater efficiency, and more favorable treatment of all stakeholders, although the direction of causality is not always clear. The law and finance literature has documented the important role of institutions aimed at contractual and legal enforcement, including corporate governance, across countries. Using firm level data, researchers have documented relationships between countries corporate governance frameworks on the one hand and performance, valuation, the cost of capital, and access to external financing on the other. Given the benefits of good corporate governance, firms and countries should voluntarily reform more. Resistance by entrenched owners and managers at the firm level and political economy factors at the level of markets and countries partly explain why they do not.
Using a qualitative methodology (interviews), we examine the relationship between the effectiveness of corporate governance mechanisms and elitist interventions. In doing this, we identify three elitist groups – political, cultural and religious, and investigate how they shape the legitimacy and effectiveness (or otherwise) of the institutional drivers of corporate governance in Nigeria. We caution the widely-held notion in the literature which suggests that institutions act as a check on the behaviour of elites and influence how elites compete and emerge. Alternatively, we argue that elites, in the presence of institutional voids, can invent, circumvent and corrupt institutions.
This thesis is composed of three chapters. In the first chapter, I analyze the effect of change in product market competition on board composition and evaluate its consequences on firm performance. Using industry-specific exogenous changes in product market competition, I test whether firms respond to changes in the demand for board independence. I find that firms decrease their level of board independence by 5.52 percentage points in response to an increase in product market competition. Moreover, by exploiting the 2003 NYSE and NASDAQ rulings in a triple-difference design, I show that constraint on firm's ability to adjust its board structure in response to changes in competition has negative consequences on its performance; firms which are constrained by the regulation to reduce their board independence experience a 10.5 percentage points lower return on assets (ROA) compared to unconstrained firms. This suggests that the decrease in board independence is in the interest of shareholders. By showing that regulation may actually harm some firms, the analysis sheds light on the costs of "one size fits all" governance regulations. In the second chapter, I shed light on the political ideology of the CEO as an important determinant of firm performance. Using individual campaign contribution data, I measure the political ideology of U.S. CEOs over the period 1994 to 2014 and analyze the relation between CEO ideology and firm performance. To identify the causal effect of CEO ideology, I use a combination of time-varying effects and novel instruments based on the ideology of the pool of potential CEO hires. Across all specifications, I find that firms with Republican CEOs, on average, 6 percentage point higher ROA compared to firms with Democrat CEOs. Several alternate explanations such as time varying differences at state-industry level, political connections and firm fixed effects do not explain away the results. In the third chapter, joint work with Antonio Vazquez Lopez (UC3M), we test whether focal firms whose CEOs sit on multiple boards can suffer decreases in performance due to transient attention-grabbing events in firms where CEOs sit as independent directors. We exploit extreme returns (positive and negative), extreme earnings and extreme volatility in firms where CEOs sit as independent directors and find that such distraction leads to an average decrease of approximately 1% of focal firm's ROA, Q, market returns and ROE. This effect is stronger for focal firms that are geographically more distant to firms where CEOs sit as independent directors, which suggests that distraction is costlier in such situations. Additionally, we show that distraction is greater for CEOs that sit on the audit committee or chair a major sub-committee. Finally, we show that these distraction events also lead to lower CEO compensation and higher probability of forced turnover. ; Programa de Doctorado en Empresa y Finanzas / Business and Finance por la Universidad Carlos III de Madrid ; Presidente: Andrés Almazán; Secretario: Pedro Gete; Vocal: Miguel Antón
This study describes the Indian corporate governance system and examines how the system has both supported and held back India's ascent to the top ranks of the world's economies. While on paper the country's legal system provides some of the best investor protection in the world, enforcement is a major problem with slow, over-burdened courts and significant corruption. Ownership remains concentrated and family business groups continue to be the dominant business model. There is significant pyramiding and tunneling among Indian business groups and, notwithstanding copious reporting requirements, evidence of earnings management. However, corporate governance in India does not compare unfavorably with any of the other major emerging economies: Brazil, China and Russia. India ranks high on the ease of getting credit, and has a well-functioning banking sector with one of the lowest proportions of nonperforming assets. The two main Stock Exchanges have among the highest number of trades in the world, and the relatively young Securities and Exchanges Board of India has a rigorous regulatory regime to ensure fairness, transparency and good practice. Most importantly, the corporate governance landscape in the country has been changing fast over the past decade, particularly with the enactment of Sarbanes-Oxley type measures and legal changes to improve the enforceability of creditor's rights. If this trend is maintained, India should have the quality of corporate governance necessary to sustain its impressive current growth rates.
International audience ; The beginning of this reasoning puts forward the problem of the nature of the company and of its institutional justification, particularly according to the balance "contribution – remuneration" addressed to its stakeholders and to the society, as well as the vocation of corporate governance to focus everything on economic value creation. The political sphere having lost its traditional function of sense making is then confronted with a dilemma: - to answer, according to its doctrinal logic, social problems by developing public services, - to limit this development to face the contesting of public utilities according to the argument of efficiency and, at the same time, favoring the development of companies according to the legitimacy of privatizations. These two aspects represent the dialectical argument of the place of the State in a liberal perspective with an oscillation between a 'positive' State according to the legitimacy attributed to its intervention and a 'negative' State, which has to intervene the least possible, while guaranteeing the conditions of development for companies. On front of the lack of a political answer, private initiative tends to develop, in a palliative way, with NGOs for example, NGOs which are ruled according to corporate governance, but adding this new kind of organizations with an institutional vocation to fulfill missions of public utility. Their modes of governance are inherited from corporate governance but according to a humanist and social objective. The research question of this text is to know how far the expansion of governance we experience today is related (or not) with corporate governance and what does it mean. The lines of reasoning of this text is as follows: - comments about the development of 'intermediate' organization, - the discussion of a 'broad' conception of governance, - comments on the White Paper on European Governance issued by the European Commission.
International audience ; The beginning of this reasoning puts forward the problem of the nature of the company and of its institutional justification, particularly according to the balance "contribution – remuneration" addressed to its stakeholders and to the society, as well as the vocation of corporate governance to focus everything on economic value creation. The political sphere having lost its traditional function of sense making is then confronted with a dilemma: - to answer, according to its doctrinal logic, social problems by developing public services, - to limit this development to face the contesting of public utilities according to the argument of efficiency and, at the same time, favoring the development of companies according to the legitimacy of privatizations. These two aspects represent the dialectical argument of the place of the State in a liberal perspective with an oscillation between a 'positive' State according to the legitimacy attributed to its intervention and a 'negative' State, which has to intervene the least possible, while guaranteeing the conditions of development for companies. On front of the lack of a political answer, private initiative tends to develop, in a palliative way, with NGOs for example, NGOs which are ruled according to corporate governance, but adding this new kind of organizations with an institutional vocation to fulfill missions of public utility. Their modes of governance are inherited from corporate governance but according to a humanist and social objective. The research question of this text is to know how far the expansion of governance we experience today is related (or not) with corporate governance and what does it mean. The lines of reasoning of this text is as follows: - comments about the development of 'intermediate' organization, - the discussion of a 'broad' conception of governance, - comments on the White Paper on European Governance issued by the European Commission.
International audience The beginning of this reasoning puts forward the problem of the nature of the company and of its institutional justification, particularly according to the balance "contribution – remuneration" addressed to its stakeholders and to the society, as well as the vocation of corporate governance to focus everything on economic value creation. The political sphere having lost its traditional function of sense making is then confronted with a dilemma: - to answer, according to its doctrinal logic, social problems by developing public services, - to limit this development to face the contesting of public utilities according to the argument of efficiency and, at the same time, favoring the development of companies according to the legitimacy of privatizations. These two aspects represent the dialectical argument of the place of the State in a liberal perspective with an oscillation between a 'positive' State according to the legitimacy attributed to its intervention and a 'negative' State, which has to intervene the least possible, while guaranteeing the conditions of development for companies. On front of the lack of a political answer, private initiative tends to develop, in a palliative way, with NGOs for example, NGOs which are ruled according to corporate governance, but adding this new kind of organizations with an institutional vocation to fulfill missions of public utility. Their modes of governance are inherited from corporate governance but according to a humanist and social objective. The research question of this text is to know how far the expansion of governance we experience today is related (or not) with corporate governance and what does it mean. The lines of reasoning of this text is as follows: - comments about the development of 'intermediate' organization, - the discussion of a 'broad' conception of governance, - comments on the White Paper on European Governance issued by the European Commission.
Corporate Governance in Bosnien und HerzegowinaIm Laufe der Zeit ist die Corporate Governance weltweit eine Selbstverständlichkeit geworden. Allerdings, hat die Regierung in Bosnien und Herzegowina bis jetzt die Einführung der Corporate Governance unterlassen. Dies führte zur erfolglosen Privatisierungen und weiters zur Unterschätzung und Zerstörung vieler Unternehmen. Infolgedessen ist das Vorhandensein der Corporate Governance von großer Bedeutung für B-H sowohl für private als auch für die übrigen großen staatlichen Unternehmen. Ziel dieser Arbeit war, sowohl die allgemeine Bedeutung der Corporate Governance als auch die spezifischen Aspekte unter bosnisch-herzegowinischen Besonderheiten darzulegen.Auf Grund der Komplexität der Corporate Governance wurden die Lage der Minderheitsaktionäre und das Corporate Reporting unter Berücksichtigung der institutionellen Rahmenbedingungen in B-H dargestellt. 78% der börsennotierten Unternehmen in B-H werden durch Mehrheitsaktionäre kontrolliert, die die Minderheitsaktionäre trotz gesetzlichen Rahmenbedingungen gefährden können. Nicht außer Acht zu lassen, sind die Erfahrungen der zuständigen Institutionen über das Corporate Reporting, die die geringe Einhaltung der Transparenzanforderungen in B-H bestätigen. Die offen gelegten Informationen dürfen seitens der Investoren nicht immer als verlässlich interpretiert werden. Die Analyse bestätigt, dass rechtliche Rahmenbedingungen für Corporate Governance in B-H existieren. Die Durchsetzung und Anwendung der Gesetze ist jedoch inadäquat. Die Corporate Governance in B-H befindet sich in der Eintrittsphase. Die begonnenen Reformen müssen fortgesetzt und die Bedeutung der Corporate Governance aufgeklärt werden. Dies bezieht sich insbesondere auf die Transparenz, die die bosnisch-herzegowinischen Unternehmen für potenzielle Investoren attraktiver machen würde. Um die Fortschritte diesbezüglich zu erleichtern, ist die konsequente Staatspolitik jedoch entscheidend. ; Corporate Governance in Bosnia and HerzegovinaOver the time, the Corporate Governance has become a necessary part of the bussines world. However, the government of Bosnia and Herzegovina has avoided to introduce the system of corporate governance. This led to the unsuccessful privatization and further to the underestimations and destruction of many companies. For this reason, the existence of corporate governance is of great importance for both private and the remaining large state enterprises. The aim of this work was to present the general importance of corporate governance as well as the specific characteristics related to the Bosnia and Herzegovina. Due to the complexity of the topic the situation of the minority shareholders and corporate reporting has been researched under the consideration of the instutitonal environment in B-H. 78% of listed firms in B-H are controlled by the majority shareholders. Despite the legal framework they are able to compromise the status of the minority shareholders. Further more, the experience of the competent institutions regarding the corporate reporting confirms the low compliance with the transparency requirements by the firms in B-H. The disclosed information is often very useful, but should not always be taken as a reliable decision factor.Recent analysis revealed the existence of the legal framework for corporate governance in B-H. However, it contains numerous gaps, as the enforcement and application of the laws are inadequate. The corporate governance in B-H is still at the very beginning. The initiated reforms must be continued, and the importance of corporate governance should be enlightened. This refers in particular to the transparency that would make the Bosnian-Herzegovinian company more attractive to potential investors. To facilitate the progress in this field, the consistent state policy is fundamental. ; Nerma Halilovic ; Abweichender Titel laut Übersetzung der Verfasserin/des Verfassers ; Zsfassung in engl. Sprache ; Graz, Univ., Masterarb., 2010 ; (VLID)213412
In: Chen , S 2020 , ' Corporate governance and corporate social responsibility ' , Doctor of Philosophy , University of Groningen , [Groningen] . https://doi.org/10.33612/diss.135926510
Corporate governance and corporate social responsibility In recent decades, the field of corporate governance has increasingly recognized corporate social responsibility (CSR)—the responsibility of firms to serve the interests of a broader set of stakeholders beyond their shareholders—as an important part of the corporate goal. This dissertation includes three empirical studies that are designed to advance our knowledge about the role of corporate governance in shaping a firm's CSR practices. Findings from these studies highlight two issues regarding the intersection between corporate governance and CSR. First, in some cases, corporate governance mechanisms that should stimulate socially responsible behavior merely play a symbolic role. As demonstrated in Chapter 2, NGO directors are more prevalent among firms with lower prior year CSR performance. Yet, their presence on boards is not associated with subsequent improvements in CSR performance. Second, institutions manifest their influence on the relationship between corporate governance mechanisms and CSR over time and across space. Chapter 3 explores the time dimension, revealing that transient institutional investors and quasi-indexers have become more important in reducing executive-to-worker pay dispersion as this issue becomes more salient since the 2007-2008 financial crisis. Chapter 4 focuses on the space dimension and shows that the effectiveness of board gender diversity policies in increasing women on boards varies across countries due to the different legislative, cultural, and economic institutions.
Corporate governance has become an essential tool for improving corporate performance and advancing the development of market-oriented democracies. Good governance practices maintain the integrity of business transactions and in so doing strengthen the rule of law and democratic governance. A powerful antidote to corruption, corporate governance clarifies private rights and public interests, preventing abuses of both. The paper discusses the key concepts in corporate governance, a framework for applying corporate governance principles to emerging markets situations, and outlines the four-step strategy. The paper discusses include: need and growing significance of corporate governance, benefits of corporate governance, basic principles and internal and external aspects of firm governance. A four-step strategy is discussed for effective corporate governance.